364-day bill weighted average continues to tumble

• Benchmark yield dips to a 20-week low
• Activity in the secondary bond market picks up
• Rupee hits over a four-month high

By Wealth Trust Securities

The 364 day bill weighted average continued to tumble for a fifth consecutive week, recording its steepest decrease this time around at its auctions conducted yesterday. A 12 week high bid to offer ratio of 3.44:1 saw the 364 day decline by 12 basis points to a 20-week low of 10.40% followed by the 91 and 182 day bills by 10 and 12 basis points to 9.39% and 9.67%.  

The exact total offered amount of Rs. 25 billion was accepted at the auction with the 364 day bill representing 80% of this volume, indicating continued market demand for this maturity. 

The expectation and final outcome at the weekly Treasury bill auction saw activity in the secondary bond market increasing yesterday. The yields on the liquid maturities of 15.12.21, 15.03.24 and 01.05.29 were seen dipping to intraday lows of 10.59%, 11.00% and 11.38% respectively against their previous day’s closing levels of 10.65/70, 11.02/07 and 11.43/45. In addition, the 15.10.21 and two 2027’s (i.e. 15.01.27 and 15.06.27) maturities dipped to intraday lows of 10.63%, 11.20% and 11.30% respectively as well against its previous day’s closing levels of 10.65/75, 11.15/30 and 11.30/38. On the very short end of the yield curve, the 01.05.20 maturity was seen changing hands from a high of 10.40% to a low of 10.30%.

The total secondary market Treasury bond/bill transacted volumes for 26 March was Rs. 3.5 billion. 

In money markets, the Open Market Operations (OMO) department of the Central Bank of Sri Lanka was seen infusing an amount of Rs. 9.96 billion and Rs. 5.00 billion on an overnight and seven day basis at weighted averages of 8.62% and 8.50% respectively yesterday.  The overnight call money and repo rates averaged 8.55% and 8.64% respectively as market liquidity remained negative at Rs. 12.96 billion.

Rupee appreciates to over a four-month high

The Rupee on its spot contracts appreciated further yesterday to hit over four-month high of Rs. 175.95 before closing the day at Rs. 176.20/35 against its previous day’s closing level of Rs. 177.40/55 on the back of inward remittances and exporter conversions.

The total USD/LKR traded volume for 26 March was $ 116.50 million.

Some of the forward USD/LKR rates that prevailed in the market were 1 month - 177.10/40; 3 months - 178.80/20 and 6 months - 181.70/10.